Argentina's commitment to IMF to reduce discretionary transfers is credit negative for provinces
Last Friday, the International Monetary Fund (IMF) published the staff report on economic developments and policies behind the
Stand-By Arrangement granted to Argentina (B2 stable) on 20 June. The agreement is supported by Argentina’s commitment to
accomplish its fiscal goals, which consist of reaching a primary deficit of 2.7% of GDP in 2018 and 1.3% of GDP in 2019, from a deficit
of 3.8% of GDP in 2017. To attain these goals, among other measures, the federal government has committed to reduce discretionary
transfers to provinces by 0.5% of GDP by 2018 and 1.2% of GDP by 2019 (see Exhibit 1), a credit negative for regional and local
governments (RLGs).